Haigh v Department of Planning NSW

1. [1]

   HER HONOUR: This matter involves an application to summarily dismiss the proceedings or alternatively to strike out the pleadings.

2. [2]

   The plaintiff is Stephen Haigh. The second plaintiff is Dimitrios Kikiras. The first defendant is the Department of Planning NSW. The second defendant is Sam Haddadd. The third defendant is the State of New South Wales. At the hearing, on 20 April 2022, P King of Counsel appeared for the plaintiffs. V Thomas of Counsel appeared for the defendants with S Love.

3. [3]

   By Notice of Motion filed 28 May 2021, the defendants seek an order that the plaintiffs’ claim for relief against them be summarily dismissed pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) or alternatively that the pleading against them be struck out pursuant to UCPR r 14.28. The parties relied upon a joint court book (“Ex (1)-(3)”).

Background – plaintiff’s version of events

1. [4]

   In these proceedings, the plaintiffs seek damages for losses arising from the acquisition of land located at Hillsdale (“the Hillsdale Land”), in the municipality of Botany Bay Council (“the Council”) by Jazabas Pty Ltd (“Jazabas”) in 1993.

2. [5]

   The circumstances by which the Hillsdale Land was acquired by Jazabas, was information that was provided to Mr Haigh before Jazabas was acquired and the losses that are alleged to have resulted from the acquisition of the land, have been the subject of two proceedings in the NSW Supreme Court. The first of the proceedings, proceeding number 1998/55043, commenced in 1998 (“1998 proceedings”) were determined when an application for special leave to appeal from a decision of the NSW Court of Appeal (City of Botany Bay Council v Jazabas Pty Limited [2001] NSWCA 94 (“City of Botany Bay”)) was refused by the High Court in April 2001. The second proceedings, number 2005/20020, commenced in 2005, (“the 2005 proceedings”) were stayed when the plaintiffs in those proceedings failed to comply with orders for security for costs.

3. [6]

   The following background is taken largely from judgments delivered in those two proceedings.

4. [7]

   On 21 December 1993, Evenvest Pty Ltd entered into a contract with Amcor Ltd to purchase the Hillsdale Land for the purpose of constructing a medium density residential development. In November 1993, the Council had issued certificates under s 149 of the Environmental Planning and Assessment Act 1979 (NSW), stating that no development control plan or draft plan applied to the land. It also stated that the land was not “affected by any Council policy to restrict development by reason of… any other risk”: See City of Botany Bay at [108]-[109].

5. [8]

   On 10 December 1993, the Council resolved to prepare a development control plan over the Hillsdale Land. Knowing that the property was going to public auction, the Council informed Amcor of that decision. No information relating to possible contamination of the land was disclosed.

6. [9]

   Sometime after this decision, Mr Haigh contacted an officer of the Council (Ms Cuthbert) concerning the prospect of Evenvest obtaining approval for the proposed development. In the 1998 proceedings, his evidence was that Ms Cuthbert told him that, provided any proposed development complied with the relevant development standards, she did not think that there would be any problem in obtaining development consent. On 21 December 1993, Evenvest entered into a contract with Amcor for purchase of the Hillsdale Land. The contract was later novated and Jazabas was substituted as the purchaser. On 28 June 1994 Jazabas completed the purchase of the property.

7. [10]

   Nine years before the purchase, the NSW Department of Planning and Environment had prepared a Risk Assessment Study (“the 1985 RAS”) for the Botany Randwick Industrial Complex. In the 2005 proceedings, it was alleged by Jazabas that the 1985 RAS was prepared by Mr Haddad, the second defendant in the current proceedings, and who at the time was an officer of the first defendant. The introduction to the 1985 RAS stated that it had been prepared due to concerns about “the intensification of potentially hazardous installations and associated facilities in the area and their overall risk implications on nearby residential land uses”. It identified a “risk reduction zone” and stated that, pending a safety review and update, no intensification of new residential developments should be allowed within that zone. The Hillsdale Land fell within the risk reduction zone: See City of Botany Bay at [136]-[143].

8. [11]

   Despite the fact that the Council had been provided with a copy of the 1985 RAS in June 1985, it was not taken into account in determining development applications in the municipality before July 1996.

9. [12]

   In the 1998 proceedings, Jazabas alleged that the information conveyed to Mr Haigh by Ms Cuthbert and in the s 149 certificates issued before December 1993, were misleading because the Council had a policy to restrict residential development in the area by reason of the 1985 RAS. Alternatively, it alleged that the Council was negligent in failing to have regard to the 1985 RAS when information was conveyed to Jazabas before the purchase of the Hillsdale Land. It was claimed that, if Jazabas had known of the alleged policy or that the 1985 RAS would likely mean that its development could not proceed, it would not have purchased the Hillsdale Land.

10. [13]

    On 1 April 1996, Jazabas submitted a residential development proposal for the land. On 4 June 1996, it was approved by the Council. It appears that the Council did so, again, without regard to the 1985 RAS.

11. [14]

    The position changed, however, with the lodgement of Jazabas’ building application. It was lodged on 20 October 1997. After its lodgement, an officer of the Council ascertained that the property fell within the risk reduction zone of the 1985 RAS. He recommended to Council that consideration of the building application be deferred.

12. [15]

    Mr Haigh became aware that the Council’s attitude towards the development had changed. The time for approval of Jazabas’ application lapsed and, on 23 December 1997, Jazabas commenced proceedings in the Land and Environment Court (“LEC”), challenging the Council’s deemed refusal of Jazabas’ application for building approval. Early in 1998, officers of the Council appeared to be considering whether Jazabas’ application could be approved, notwithstanding the 1985 RAS.

13. [16]

    This seems to have prompted correspondence with the NSW Department of Urban Affairs and Planning. On 16 February 1998, Mr Haddad wrote to the Council, responding to a letter of 30 January 1998, concerning the scope of the risk reduction zone in the 1985 RAS. In it, he stated that: (City of Botany Bay at [227])

14. [17]

    Having received this letter, the Council determined that it would oppose Jazabas’ LEC proceedings. The grounds on which it did so included that the land was located in the risk reduction zone, was proximate to a petrochemical plant and that the building plans did not satisfactorily address measures to protect inhabitants from risk of death or injury in the event of a substantial release of toxic gases or some other contamination event. Mr Haddad gave evidence on behalf of the Council at the hearing.

15. [18]

    On 23 April 1998, an LEC Assessor dismissed Jazabas’ appeal against the Council’s deemed refusal of its application for building approval, deciding that the evidence established that the land was unsuited for further residential intensification on hazard grounds.

16. [19]

    By a Statement of Claim dated 30 July 1998, Jazabas commenced proceedings in the Federal Court against the Council alleging breaches of the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW) and negligence. Those proceedings were later transferred to the Supreme Court of NSW.

17. [20]

    After the commencement of those proceedings, the Council took the unusual step of seeking to overturn the LEC decision upholding the refusal of Jazabas’ application for building approval. On 2 February 1999, the Council lodged an appeal from the decision in its favour. The Council’s new position was that it should have granted Jazabas application for building approval because it had no power to refuse it on the basis of the 1985 RAS. On 16 April 1999, Lloyd J upheld the appeal and the application was remitted to an assessor for redetermination. On 15 July 1999, the LEC made an order granting approval of Jazabas’ building application.

18. [21]

    On 15 August 1999, Jazabas sold the Hillsdale Land with the benefit of building approval and secured a “modest profit”: Jazabas v Haddad & Ors [2007] NSWCA 291 at [43].

19. [22]

    With that background, the 1998 proceedings were heard by Rolfe J in December 1999 and February 2000. In Jazabas v Botany Council [2000] NSWSC 58, his Honour found in favour of Jazabas, finding that the information in the s 149 certificates, and conveyed by Ms Cuthbert, constituted negligent misstatements that had induced Evenvest and Jazabas to enter into contracts for the Hillsdale Land.

20. [23]

    Jazabas’ case on damages was that, if it had not purchased the Hillsdale Land, it would have undertaken four new dual occupancy developments each year from 1994 up to 1999. Rolfe J assessed Jazabas’ damages on the basis that it would have undertaken 12 developments during that period. After discounting the total for the chance that such profits may not have been derived and deducting the profit that Jazabas had derived on the sale of the property in 1999, his Honour awarded damages to Jazabas in the sum of $1,218,832.

21. [24]

    An appeal by the Council from the decision of Rolfe J was upheld in April 2001. The Court found that there had been no misleading conduct or negligent misstatement by the Council. An application for special leave by Jazabas was refused by the High Court.

22. [25]

    In 2005, Jazabas, BAS Developments Pty Ltd and Permtree Pty Ltd commenced fresh proceedings in this Court in relation to the Hillsdale Land in the Supreme Court against Mr Haddad, the State of NSW and the Council.

23. [26]

    While there was some overlap with the 1998 proceedings, new allegations of fact were pleaded to found the liability of Mr Haddad and the State. In particular, it was alleged that the 1985 RAS was a “sanitised” version of an earlier unpublished RAS, prepared by Mr Haddad in 1983, and contained “erroneous representations about the risk of death, serious injury and irritation from toxic hazards to present and future residents”.

24. [27]

    The plaintiffs made claims against Mr Haddad for misfeasance in public office, injurious falsehood, breach of s 42 of the Fair Trading Act 1987 (NSW), negligent advice and deceit.

25. [28]

    As against the State, the plaintiffs claimed negligent misstatement, based on its failure to warn or disclose information about the toxic risks and hazardous industry risk affecting land within the risk reduction zone. They also claimed that it was vicariously liable for the acts and omissions of Mr Haddad.

26. [29]

    The loss and damage for which Mr Haddad and the State of NSW was said to be liable included the cost of acquiring the Hillsdale Land, expenses arising from the development and building applications and interruption to and loss of opportunity for the plaintiffs’ dual occupancy development for residential purposes.

27. [30]

    In the 2005 proceedings, the defendants sought orders for security for costs, on the grounds of the impecuniosity of each of the plaintiffs. Notwithstanding the fact that, by the time of the hearing of that application, Mr Haigh had proffered a personal undertaking to meet any costs order against the plaintiffs, the application was successful. An appeal was dismissed. In dismissing the appeal, Basten JA referred to the fact Mrs Beverly Haigh and Mr Kikiras and Ms Zoe Kikiras, who were the other natural persons who were members of Jazabas at the time, had not offered any undertakings. As the plaintiffs did not provide security, the proceedings were stayed.

28. [31]

    Changes were then made to the shareholding of Jazabas. The Kikiras shares were transferred to a company controlled by Mr Haigh. Mr Haigh and his wife, Beverley became the only natural persons to hold shares in Jazabas.

29. [32]

    With those changes in place, Jazabas, BAS Developments and Permtree sought to have the stay orders lifted on the ground that Mr Haigh and his wife would give personal undertakings to meet any adverse costs order. On 27 May 2008 the matter came before me. On 17 June 2008 I dismissed the motion in Jazabas v Haddad [2008] NSWSC 593. In 2010, an appeal from my decision was dismissed by Fullerton J .

The statement of claim in the current proceedings

1. [33]

   The statement of claim filed on 28 October 2022 sets out the following pleadings and particulars:

2. [34]

   At [35] of the statement of claim, the plaintiffs refer to “very significant and hurtful family and personal losses”. At the hearing, Counsel for the plaintiffs clarified that this is to include a personal injury claim for the psychiatric and mental harm suffered by Mr Kirkiras (T57.14-16). This claim is said supported by the affidavit of Dimitrios Kirkiras dated 22 March 2022 and the psychologist report of Tim Watson-Munro dated 15 March 2022, together with other documents. However, this claim has not been pleaded or particularised with any specificity.

Leave to amend notice of motion

1. [35]

   At the hearing, Counsel for the first defendant sought leave to amend the notice of motion filed 28 May 2021 to include an application for a permanent stay of proceedings.

2. [36]

   Counsel for the first defendant submitted that the principles that apply to abuse of process, as the Court of Appeal has noted in CBRE(BE) Pty Limited v Trilogy Funds Management Limited [2021] NSWCA 316 (“Trilogy Funds”), either under the rules or as a permanent stay are identical. In their submission, there can be no prejudice to the plaintiff in relation to that application and this comfortably satisfies the requirement of an abuse of process under UCPR r 13.4.

3. [37]

   Counsel for the plaintiff firstly argued that this application has been constituted as it presently sits for a long time. The submissions were prepared on that basis. Counsel submitted that the new application is not the same opposed it on that basis. The suggestion that there's no prejudice, when it's raised “well, now at 1 o'clock on the first day of the hearing, in our respectful submission is not supportable.” Secondly, it was submitted that the principles for summary dismissal are well established, and they give rise to different questions, they may be nuanced, they may be similar, but they're not the same: See Aon Risk Services Pty Ltd v Australian National University (2009) 239 CLR 175 at [50]. Counsel for the plaintiff submitted that prejudice is suffered by the plaintiff trying to deal with this application on the run.

4. [38]

   As I stated at the hearing, the problem with this application was that the first defendant was notified that they hadn't brought the stay and failed to amend the notice of motion until the outset of the hearing. The factors to be satisfied in order to be granted a permanent stay of proceedings differ in some regards. Further, the plaintiff had not been given the opportunity to fully ventilate anything else they wanted to say in relation to it. In these circumstances I refused to grant leave to amend the notice of motion (T74.45-50).

Summary dismissal or strike out of proceedings

1. [39]

   The first defendant relies on UCPR rr 13.4 and 14.28. They read:

2. [40]

   UCPR r 14.28 enunciates grounds, upon which a defective pleading may be struck out. UCPR r 13.4 focuses on the weakness of a party’s case rather than the defects of a pleading: Brimson v Rocla Concrete Pipes Ltd (1982) 2 NSWLR 937.

3. [41]

   The present application needs to be approached upon the basis that a very clear case is required before summary dismissal is granted and that the power to make such an order should be sparingly employed: Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 (“General Steel”) at 129; Webster v Lampard (1993) 177 CLR 598 at 602-603.

4. [42]

   The test to be applied by a court when considering summary dismissal is clear. It has been variously expressed as a claim being “so obviously untenable that it cannot possibly succeed”, “manifestly groundless”, or “so manifestly faulty that it does not admit of argument”: General Steel Industries Inc v Cmr for Railways (NSW) (1964) 112 CLR 125 at 128-129. In Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91 Dixon J observed that before summary intervention can be justified, the case must be a very clear one and there must be no real question of fact or law to be determined.

5. [43]

   By bringing an application for summary dismissal, the defendant undertakes the burden of establishing that there is no triable issue: Wickstead v Browne (1992) 30 NSWLR 1 at 11. The General Steel test remains the primary touchstone for such an application. The mere fact (if it be the case) that a plaintiff’s prospects of success might be characterised as slim would not be enough to strike out a pleading: Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 at 271; Preston v Star City Pty Ltd [1999] NSWSC 1273 (“Preston”) at [31].

6. [44]

   The question for determination is whether a reasonable cause of action is disclosed, that is a cause of action which has some chance of success, or which could conceivably give the plaintiff a right to relief, or which, although weak, is properly debatable and has some apparent legitimate basis if the facts upon which it is alleged to be based are made good: Preston at [37].

7. [45]

   The onus of satisfying the Court that there is an abuse of process lies upon the party asserting the abuse of process, and that onus is ‘a heavy one’: Williams v Spautz (1992) 174 CLR 509 at 529 (Mason CJ, Dawson, Toohey and McHugh JJ).

Reflective loss

1. [46]

   Both parties referred to the decision of Ekes v Commonwealth Bank of Australia [2014] NSWCA 336; (2014) ALR 65 (“Ekes”) where at [150]-[151], Bathurst CJ (with whom Beazley P and Emmett JA agreed) described the principle of reflective loss as follows:

2. [47]

   As stated above, an exception to this principle is where a company suffers loss caused by a breach of duty to it, and a shareholder suffers a loss separate and distinct from that suffered by the company caused by breach of a duty independently owed to the shareholder, each may sue to recover the loss caused to it by breach of the duty owed to it but neither may recover loss caused to the other by breach of the duty owed to that other: see Johnson v Gore Wood & Co [2002] 2 AC 1 (“Johnson”) at 35 per Lord Bingham.

3. [48]

   In the more recent decision of Central Coast Council v Norcross Pictorial Calendars [2021] NSWCA 75 (“Central Coast Council”) Bathurst CJ (with whom Macfarlan and Gleeson JJA agreed) set out the rationale of the reflective loss principle at [103]:

4. [49]

   In Central Coast Council at [119], Bathurst CJ set out a further exception to the reflective loss principle when the rationale is considered:

5. [50]

   A helpful summary of the reflective loss principle was set out in Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 2] [2021] WASCA 105 in the Western Australian Court of Appeal per Buss P, Murphy JA and Beech JA at [268]:

6. [51]

   Mr Haigh and Mr Kikiras, without Jazabas or any of the other companies that brought the 1998 or 2005 proceedings, bring these proceedings. Their Statement of Claim alleges the following facts and matters that were also alleged in either the 1998 and 2005 Supreme Court proceedings (or both):

7. [52]

   While the pleading is not an easy document to interpret, it would appear that the only new allegations of fact are:

8. [53]

   While the causes of action alleged by the plaintiffs do not emerge with any clarity from the pleading, it is understood that the plaintiffs seek to advance the following claims against all defendants:

9. [54]

   Each of these causes of action were advanced against Mr Haddad and the State in the 2005 proceedings.

10. [55]

    The plaintiffs claim to have suffered loss and damage by reason of the various wrongs alleged in the current Statement of Claim. Within the pleading, the only particulars that have been given are under [35], in which it is alleged that the plaintiffs have “lost the whole of their interest in Jazabas and in the [Hillsdale Land]” and suffered “consequent business interruption of their joint venture dual occupancy development activities from 1997 to date”. They also claim to have suffered “hurtful family and personal losses”.

11. [56]

    The defendants accept that, although both plaintiffs, and Mr Haigh in particular, had capacity to control Jazabas and some or all of its related entities at the time of the commencement of the 1998 and 2005 proceedings, there is no evidence that either had a legal interest in the outcome of those proceedings, so as to render either of them a privy in interest with Jazabas or the other corporate plaintiffs in the 2005 proceedings.83 Accordingly, the issue is not whether any of the forms of estoppel by judgment apply, but whether the bringing of these proceedings constitutes an abuse of process.

12. [57]

    The Court’s jurisdiction to dismiss or permanently stay proceedings as an abuse of process will be enlivened by one of two conditions. The first is where the use of the Court’s procedures occasions unjustifiable oppression to a party. The second is where the use of the Court’s procedures serves to bring the administration of justice into disrepute.

13. [58]

    Whether conduct is properly characterised as an abuse of process of the court requires consideration of all the circumstances. In UBS AG v Tyne [2018] 265 CLR 77 (“UBS”), the plurality cited with approval the following explanation of the required approach from the speech of Lord Bingham of Cornhill in Johnson v Gore Wood & Co [2002] 2 AC 1; [2001] 2 WLR 72 (“Johnson”):

14. [59]

    The defendants accept that they bear the onus of satisfying the Court that there is an abuse of process and that onus is a heavy one.

15. [60]

    It is well established that, in some circumstances, where a claim should have been brought in the earlier proceedings, the bringing of that claim in later proceedings will constitute an abuse of process, even where the later proceeding is not precluded by an estoppel. It is relevant to note that, here, although the corporate entities that brought the 2005 proceedings may not have been privies of the plaintiffs, they were closely related to them.

16. [61]

    The Court can be comfortably satisfied that these proceedings amount to an abuse of process and should be dismissed or permanently stayed.

17. [62]

    For the following reasons, the claims brought in these proceedings should have been brought in the 2005 proceedings.

18. [63]

    First, the claims in these proceedings arise out of the same allegations of fact made in the 2005 proceedings – the central claim being that the 1985 RAS was misleading.

19. [64]

    Secondly, not only is there a substantial overlap in the factual allegations, but the causes of action alleged in the current proceedings were also advanced in the 2005 proceedings. It was unreasonable for the plaintiffs in these proceedings not to have made the claims they make in these proceedings, in the 2005 proceedings, assuming that they were viable causes of action.

20. [65]

    Thirdly, the Court would be entitled to infer that, if the plaintiffs in the current proceedings (who, as natural persons, would not have been required to provide security for costs) had viable causes of action arising from the 1985 RAS, they would have made those claims in the 2005 proceedings, so as to enable them to continue. The 2005 proceedings were stayed because the corporate plaintiffs were unable to meet orders for security for costs. Strenuous attempts had been made by those companies to pursue their claim, notwithstanding their impecuniosity. These included an appeal from the orders of Simpson J to the NSW Court of Appeal, a restructuring of the affairs of Jazabas so that shareholders who were not willing to give personal undertakings, ceased to be members of the company, a further application to discharge the orders of Simpson J and a further appeal from the order dismissing that application. If the present plaintiffs had viable causes of action in their own right, they could and should have brought them in the 2005 proceedings. Had they done so, there is every reason to believe that those proceedings would not have been subjected to a stay.

21. [66]

    In the circumstances of this case, the Court would be entitled to expect that an explanation as to why the plaintiffs’ claims were not made in the earlier proceedings. The defendants are unable to identify any such explanation in the evidence served by the plaintiffs.

22. [67]

    For the following reasons, the current proceedings are such as to occasion unjustifiable oppression to the defendants.

23. [68]

    First, they face the vexation of being required to deal again with claims that should have been raised and resolved in the 2005 proceedings.

24. [69]

    Secondly, the time that has passed between the circumstances giving rise to these claims and the commencement of the proceedings, is such that the Court should find that a fair trial of the issues is impossible. The defendants accept that there is no evidence of actual prejudice. But the delay is so substantial that it would justify a finding of presumptive prejudice. Some 37 years have elapsed between the preparation of the 1985 RAS, which the plaintiffs allege was prepared by Mr Haddad with knowledge that what was included in it was misleading or erroneous, and the commencement of these proceedings. Other facts that appear to provide the basis for the plaintiff’s case on causation and would need to be the subject of evidence, span the period from 1983 to 1994.

25. [70]

    It would be oppressive to the defendants to allow an action to be brought so long after the circumstances which gave rise to it have passed.

26. [71]

    For the following reasons, the continuation of the proceedings would bring the administration of justice into disrepute.

27. [72]

    First, the public interest in the timely and efficient administration of justice, would not be served. The circumstances of the acquisition of the Hillsdale Land and the events that would have occurred if the risk of contamination of the land had been known, have already been the subject of a trial (in the 1998 proceedings), an appeal and an application for special leave. In the 2005 proceedings, in which the current defendants were also defendants, there were two interlocutory decisions by Simpson J, an appeal to the Court of Appeal, a further decision by the Associate Judge and an appeal to Fullerton J. Substantial public resources have already been utilised. To allow these proceedings to continue would frustrate, not serve, the public interest in the timely and efficient administration of justice.

28. [73]

    In UBS, the plurality said at [59]:

29. [74]

    The same observation could be made with even greater force in respect of these proceedings.

30. [75]

    Secondly, as the defendants in these proceedings would not be bound by the damages assessment in the 1998 proceedings, there would be the potential for inconsistent findings.

31. [76]

    Thirdly, to allow these proceedings to be prosecuted by those who stood behind the corporate plaintiffs in the 2005 proceedings would suggest that the orders for security made in those proceedings could be circumvented. Relevant to this point is the submission, made below, that the plaintiffs’ claim is for reflective loss, rather than any independent substantive loss they have suffered in their own right, and the defendants repeat that submission to support their application based on abuse of process.

32. [77]

    The defendants accept that the Court’s power to summarily dismiss is only exercised in “clear” or “plain and obvious” cases where it can be said that the plaintiff’s case is “futile” or “manifestly hopeless” and where the defendant cannot fairly be put to the expense of defending the claim. For the following reasons, those requirements are comfortably met in this case.

33. [78]

    As noted, the plaintiffs appear to claim to have suffered losses from tortious conduct or contraventions of statutory provisions, by reason of the acquisition, by Jazabas, of the Hillsdale Land. That property was acquired by a contract entered into in December 1993 and sold in October 1999. Relevant causes of action are likely to have accrued between those dates. The tortious claims were statute barred six years after they accrued and the statutory claims may have been subject to a three-year limitation period. Even if the Court were to take a more generous view of the losses that the plaintiffs have potentially sustained through their corporate vehicles, such losses must have been incurred, and any cause of action accrued, by 2012 at the latest, when Jazabas and related entities were deregistered. These proceedings were not commenced until 28 October 2020.

34. [79]

    It is accepted that limitation points should not be decided in interlocutory proceedings in advance of trial “except in the clearest of cases” (Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533). The present, however, is such a case and the proceedings should be dismissed on the ground that the pleaded causes of action are unquestionably all statute barred.

35. [80]

    Where a company suffers loss caused by a breach of duty owed to it, only the company may sue in respect of that loss. No action lies at the suit of a shareholder to make good a diminution of the value of the shareholder's shareholding where that loss merely reflects the loss suffered by the company. The principle extends to losses suffered as a result of diminution in the value of a person’s shareholding, loss of dividends and other amounts which the shareholder might have obtained from the company had it not been deprived of its funds.

36. [81]

    The plaintiffs were asked to provide particulars of their loss and damage (as opposed to that sustained by Jazabas and other corporate vehicles controlled by the plaintiffs). Their response was contained in Exhibit BC1 to the Affidavit of Bruce Cantrill sworn 28 May 2021. Their response includes the following (Ex 1(1), tab 4, p 13):

37. [82]

    The plaintiffs have provided the following particulars at [3] of the Statement of Claim (Ex 1(1), tab 4, p 22):

38. [83]

    The plaintiffs have provided the following particulars of their loss and damage, as pleaded at [26] of the Statement of Claim: (Ex 1(1), tab 4, p 33):

39. [84]

    It is clear from these particulars that the plaintiffs are claiming damages for losses suffered by Jazabas and have no separate and independent claim for loss. As the claim is for reflective loss, no reasonable cause of action is disclosed. Alternatively, this is a further basis on which the Court would conclude that the claim is an abuse of process and should be permanently stayed.

40. [85]

    If the proceedings are not summarily dismissed or permanently stayed, the Statement of Claim should be struck out for disclosing no reasonable cause of action or being such as to cause prejudice embarrassment or delay.

41. [86]

    First, the first defendant is a government department forming part of the Government of New South Wales and is not a necessary or proper party to the proceedings given the State of New South Wales (the third defendant) is a party to the proceedings. It should be removed as a defendant from the proceedings.

42. [87]

    Secondly, the pleading contains paragraphs that are confusing (for example [24], [25] and [31]), contain a multiplicity of allegations (for example [24], [25] and [29]) are put at such a level of generality (for example [35]) that the defendants do not know the case that they have to meet. It is appropriate to strike out the pleadings rather than order the provision of particulars. It is not the function of particulars to take the place of pleadings.

43. [88]

    Thirdly, the pleading contains allegations that have no obvious relevance to the pleaded causes of action, including [17], [19], [20], [25], [38] and [39] to [43].

44. [89]

    Fourthly, the pleading contains allegations of bad faith and other deliberate improper conduct, including [24], [25], [30], [32] and [42]. These allegations fail to meet the requirements of UCPR r 15.3 and should not be permitted to proceed in their present form.

45. [90]

    Fifthly, the pleading contains inconsistent allegations. On the one hand, it is alleged that, but for the wrongful conduct, the plaintiffs would not (through Jazabas) have purchased the Hillside Land. On the other, it is claimed that the plaintiffs would have developed the site and continued their successful dual occupancy joint venture business.

46. [91]

    Sixthly, there is no allegation of any private right of the plaintiffs that Mr Haddad infringed in giving the allegedly inaccurate evidence in the LEC and Supreme Court proceedings. There appears to be no proper legal basis for these claims.

47. [92]

    Seventhly, the cause of action for loss or damage referred to at [38] of the claim is ambiguous and unclear.

48. [93]

    Given the number and significance of the defects in the statement of claim, it should be struck out it its entirety.

49. [94]

    The plaintiff submitted that there is no evidence of ulterior or improper motive amounting to oppression or misuse of the Court’s process. The plaintiffs have filed longstanding and independent claims that are unresolved and unestopped. Further, the statement of claim discloses a reasonable cause of action which the defendants apprehend. To the extent the defendants rely in this application on meritsbased defences such as limiting the caselaw and common-sense point to the conclusion that they have struck prematurely. As a fall-back case the defendants contend that some or all of the statement of claim should be struck out on form grounds under UCPR r 14.28 because either it discloses no reasonable cause of action under sub-r 1(1)(a) or under sub-r (1) (b) causes prejudice, embarrassment or delay.

50. [95]

    As to delay and prejudice, apart from the complete absence of any relevant evidence with respect to proof of a merits case in response to the underlying facts, it is the defendant who filed its application late and then has taken almost a year to get the matter heard including by failing to lodge its material on time with costs orders made by the Registrar against them for such failures.

51. [96]

    Both bases of the application set out above should now be rejected. Further the defendants’ contention that the nub of its complaint that the proceedings rehash old matters cannot either initially or finally withstand scrutiny in light of the defendants’ concession that there is no estoppel defence by way of res judicata, conventional estoppel, Anshun estoppel or any issue estoppel from past actions involving the defendants and deregistered corporate entities, and upon which they erroneously seek to rely. Further, the contention at [61]-[65] of the first defendant’s submissions that the plaintiffs could and should have made all the current allegations in the 2005 proceedings makes no sense especially having regard to the risk of concealment issues. In the circumstances, the Court should dismiss the application with costs and the defendants should be ordered to put on defences and proceed with the case.

52. [97]

    Another way of testing the defendants’ case as submitted with respect to the abuse of process argument is to ask whether the statement of claim discloses a reasonable cause of action. It would be extraordinary if the proceedings were found to be an abuse of process in such a case having regard to rr 13.4(1)(b) and 14.28(1)(a) of the UCPR. The two grounds relied on by the defendants for the conclusion that the statement of claim in its form discloses no reasonable cause of action in the defendants’ submissions are that the claims are statute barred and that the claims are ‘for reflected loss’. However upon clear authority it is not appropriate to summarily dismiss proceedings on the former ground where a defendant has filed no defence and the plaintiff no reply: see Forrest v ASIC [2012] HCA 39; 247 CLR 486 at [24]–[27] per French CJ, Gummow, Hayne and Kiefel JJ.

53. [98]

    In Wardley Australia Ltd v Western Australia ("Rothwells Loan case") (1992) 175 CLR 514; [1992] HCA 55 Mason CJ, Dawson, Gaudron and McHugh JJ said at [31]:

54. [99]

    That ruling applies in full measure here. That aspect of the defendants’ form case is hopeless.

55. [100]

    As to ‘reflected loss’ which on one reasonable view informally admits a loss to the plaintiffs because the word reflected means a representation or image in this case of the plaintiffs’ loss, the way the case is put is confected. Unsurprisingly the phrase is not found in the caselaw on this topic. As to demonstration of that loss it is submitted that this must await the final hearing, which will affect the evidence as a whole and in particular determine whether the plaintiffs have proved the losses and injury they have claimed. The defendants acknowledge that the plaintiffs’ claimed loss and injury includes loss of opportunity, business interruption, and hurtful family and personal losses. There is accordingly plainly disclosed in the statement of claim a reasonable cause of action as to loss and injury, which is sufficient to dispose of the whole application.

56. [101]

    At the hearing, counsel for the plaintiff provided further submissions regarding reflective loss (T164-166):

57. [102]

    It is submitted that the following triable issues of fact arise in the matter and should be heard on the merits upon the whole of the admissible evidence at final hearing and as to which for present purposes the applicants/defendants bear the onus of proof, that being a heavy onus:

58. [103]

    As to the relevant test of summary dismissal the defendants fail to draw attention to the leading authority in this Court set out in O'Brien v Bank of Western Australia Ltd [2013] NSWCA 71 at [3]:

59. [104]

    The defendants have conspicuously failed to address the onus upon them of demonstrating that not only the pleaded case, but also the available case, is fanciful. They acknowledge the causes of action and their potentiality. However, they have not sought to demonstrate the outcome of the litigation as required by the Court of Appeal, but instead their submissions speculate about what might have been and what could be. The plaintiff submitted that this application fails on these grounds at the outset. It was open to the defendants to submit evidence if admissible on the triable issues set out above, but it has not done so. In the plaintiff’s submission, the defendants admit that they cannot rely on any issue estoppel in these proceedings and yet they seek to set out the facts of the case (see defendant’s submissions at [14]-[54]) by reference to such judgments, and not the allegations of fact alleged in the statement of claim: see defendants’ submissions at [22].

60. [105]

    As to the form issue it is further submitted that the statement of claim identifies with precision what it is that constitutes the breach or breaches of duty: see Lynx Engineering Consultants Pty Ltd v The ANI Corporation (No 2) [2009] FCA 363. Of course the allegations in the statement of claim are taken to be accepted for present purposes: Empire Shipping Co v Owners of Shin Kobe Maru (1991) 32 FCR 78. Embarking upon a detailed investigation of the whole matter on a strike out application which the defendants invite the Court to undertake requires the defendants to satisfy the Court that doing so will either avoid the need for or substantially reduce the scope of a subsequent trial: Williams and Humbert Ltd v Marks (Jersey) Pty Ltd [1986] AC 368 at page 436; Sun Earth Homes Pty Ltd v Australian Broadcasting Corporation [1993] 45 FCR 265. That ought to be done at the outset, but no attempt has been made to do so, and looking at the matter such an investigation, before close of pleadings, discovery, and exchange of the evidence of the parties on the pleaded issues, is unlikely to be a worthwhile use of the Court’s time and resources: see Civil Procedure Act 2005 (NSW) s 56.

61. [106]

    The contention of the defendants that the whole of the claims in the current proceedings arise out of ‘the central claim’ that the 1985 RAS was misleading, as recorded in the defendant’s submissions at [62], is in error. Accordingly had the defendants not misconducted themselves in public office,

62. [107]

    Further, had the defendants not interfered in Botany Councils consent process for the Jazabas building application, and misled the plaintiffs and the Council:

63. [108]

    Again, had the defendants not abused the process of the Court and provided the 1983 RAS and the 99 annexed maps to the Court and the plaintiffs:

64. [109]

    And, had the defendants not approved the Orica replacement chlorine plant in 1998:

Resolution

1. [110]

   Through a fair reading of the statement of claim in this matter, the most noticeable differentiation between this matter and the 1998 and 2005 proceedings is that this claim is brought by the first and second plaintiffs in a personal capacity as shareholders of Jazabas.

2. [111]

   As raised by the defendants, an issue of law arises as to whether a shareholder can bring a claim for damages with regards to losses suffered by the company in which they retain shares.

3. [112]

   As stated earlier in this judgment, the principle of reflective loss dictates that when a company suffers loss caused by a breach of duty owed to the company, no action lies at the suit of a shareholder to make good a diminution of the value of the shareholder’s shareholding where that loss merely reflects the loss suffered by the company. However, the principle does not prevent the shareholder suing for a loss suffered from a breach of duty owed to him or her where the loss is separate and distinct from the loss suffered by the company: see Ekes at [150]-[151].

4. [113]

   The principle extends to include losses suffered as a result of diminution in the value of a person’s shareholding, loss of dividends and, importantly, loss of other amounts which the shareholder might have obtained from the company had it not been deprived of its funds: see Johnson at 66.

5. [114]

   As per Lord Bingham of Cornhill in Johnson at 35, the object is to ascertain whether the loss claimed appears to be or is one which would be made good if the company had enforced its full rights against the party responsible, and whether the loss is merely a reflection of the loss suffered by the company.

6. [115]

   In the matter of Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 at 223 their Honours Cumming-Bruce, Templeman and Brightman LJJ, set out a simple illustration which in my view is quite fitting to the matter before this Court. It is as follows:

7. [116]

   If the current case is to be compared to this illustration, the £100,000 is the Hillsdale Land and the fraudulent misrepresentation in persuading the plaintiff to part with the key to the cash box is equivalent, for the sake of this comparison, to the allegations of concealment, misfeasance in public office, deceit and misleading and deceptive conduct.

8. [117]

   In the defendants’ submission, just as in the illustration above, there is no loss to the plaintiffs which is separate and distinct to that of the company Jazabas.

9. [118]

   I have carefully read the statement of claim filed by the plaintiffs. All of the damages claimed relate to alleged losses suffered by Jazabas in relation to the purchasing of the Hillsdale Land in 1994. This is evident in the plaintiffs’ response to a request of particulars made by the defendants (Ex 1(1), tab 4, p 13-22):

10. [119]

    From this, it is clear that the losses claimed are those which were sought by Jazabas in previous proceedings.

11. [120]

    While [39] of the statement of claim onwards does appear to set out a new claim relating to the Chlorine Complex, the losses claimed still relate to the one which would have been made good had Jazabas enforced its rights against the defendants in the previous proceedings. This claim falls within the ambit of reflective loss and is an abuse of process.

12. [121]

    Counsel for the plaintiffs, Mr P King, referred to the Stendhal, who in his opinion is perhaps one of the greatest novelists, and adapted a quote from his novel Le Rouge et le Noir in stating that “what is a beautiful pleading to one is unintelligible to another.” (T133.38-41). While that may be the case, the pleadings before this Court disclose no reasonable cause of action except for what follows below.

13. [122]

    The only alleged actionable wrong which is separate and distinct to that which is available to Jazabas is the mental harm and psychological loss claimed to have been suffered by Mr Kirkiras. Jazabas has no cause of action to sue and recover that loss and so, as an exception to the reflective loss principle, Mr Kirkiras, as a shareholder, may sue: see Johnson at 35 and Central Coast Council at [104], [119]. Further pleadings and particulars are needed with regard to the alleged mental harm suffered.

14. [123]

    At the hearing, counsel for the first defendant conceded that the alleged psychological harm suffered by Mr Kirkiras is a loss that is separate and distinct from the loss suffered by the company (T123.16-20).

15. [124]

    There is the report by Tim Watson-Munro, psychiatrist, dated 15 March 2022 which somewhat supports Mr Kirkiras’ personal injury claim (Ex 1(3), tab 13, p 24). Mr Watson-Munro first examined Mr Kirkiras in 2021. His opinion is that it was apparent to him from the history he obtained that Mr Kirkiras was suffering features of a depressive disorder reflected in high levels of anxiety, marital conflict, substance use as a means of self-medication, a gambling addiction as a means of escape with associated dissociative behaviour when gambling and a general sense of despair. Mr Kirkiras reported to Mr Watson-Munro that, up until the acquisition of the Hillsdale Land, he was well regarded in the community and did not suffer any symptoms of depression or anxiety. Mr Watson-Munro reported that Mr Kirkiras’ history reflects, up until that time, he was enjoying a trajectory of success both as a real estate agent and through his involvement with Mr Stephen Haigh referable to successful and profitable property developments. Mr Kirkiras believes that his Depressive Disorder essentially developed and escalated because of the delays referable to the property at Hillsdale.

16. [125]

    However, s 18A of the Limitation Act 1969 (NSW) reads:

17. [126]

    From the report of Mr Munro-Watson, it is unclear when the second plaintiff first became aware that he suffered a depressive disorder. It may be that the second plaintiff’s claim for personal injury is statute barred or he may seek an extension of the limitation period depending on when he became aware or ought to have became aware that he suffered the psychiatric injury. This is a matter that should be further investigated by the plaintiffs’ legal representatives, as to whether the cause of action is statute barred before filing an amended statement of claim.

18. [127]

    Leave is granted to the second plaintiff to replead the statement of claim only so far as it relates to the psychological harm suffered by Mr Kirkiras as pleaded in the statement of claim filed 28 October 2020 and further clarified in Mr Kirkiras’ affidavit dated 22 March 2022. The sum of the statement of claim, as it merely reflects the loss suffered by Jazabas, discloses no reasonable cause of action and is an abuse of process. It should be struck out pursuant to UCPR 14.28(1)(a).

Result

1. [128]

   The result is that the pleadings in the statement of claim filed 28 October 2020 are struck out pursuant to UCPR r 14.28. The second plaintiff is granted leave to replead only so far as it relates to the claim of mental harm and psychiatric injury. The matter is stood over for a directions hearing before the Registrar at 9.00am in 6 weeks.

Costs

1. [129]

   Costs are reserved.

   1. (1)

      The statement of claim filed 28 October 2020 are struck out pursuant to Uniform Civil Procedure Rules 2005 (NSW) r 14.28.

   2. (2)

      The second plaintiff is granted leave to replead only so far as it relates to the claim of mental harm and psychiatric injury.

   3. (3)

      The matter is stood over for a directions hearing before the Registrar at 9.00am in 6 weeks (25 November 2022).

   4. (4)

      Costs are reserved.